Down with Primitivism: A Thorough Critique of Polanyi

There is a long lasting intellectual illusion that typically idealized antique societies and technolgies.

This has always been terribly absurd.  The past was constrained by the limits of the Mark I human.  Recall Aztec civilization totally depended on the human back to move goods.  Better yet recall that a donkey may have carried two humans worth of goods but still required a human to lead the donkey.  Other animals provided an improvement but not overwelmingly so.

All primitive societies were limited by serious lack of usable energy.  We have only left that world so recently that my generation rembers steam tech and the miricle of Steam rail transport.  That alone took a century.

Today hydrocarbons provide cheap energy and will now be replaced by batterty packs at least.  That soon means independent robots to do agricultural drugery.  That will truly create the modern world.

Down with Primitivism: A Thorough Critique of Polanyi

TAGS BiographiesCalculation and KnowledgeHistory of the Austrian School of Economics02/14/2022Murray N. Rothbard

Karl Polanyi’s The Great Transformation is a farrago of confusions, absurdities, fallacies, and distorted attacks on the free market. The temptation is to engage in almost a line-by-line critique. I will abjure this to first set out some of the basic philosophic and economic flaws, before going into some of the detailed criticisms.

One basic philosophic flaw in Polanyi is a common defect of modern intellectuals—a defect which has been rampant since Rousseau and the Romantic Movement: Worship of the Primitive. At one point, (in dealing with the Kaffirs), Polanyi actually uses the maudlin phrase "noble savage," but this idea permeates the book. (For an excellent discussion of Rousseau, primitivism, and the romantic movement, see Irving Babbitt, Rousseau and Romanticism.) Modern Rousseauism received a major impetus from the cultural anthropologists, such as Ruth Benedict, Margaret Mead, Franz Boas, and the like (many of whom were Communists, and the remainder highly left-wing), who went eagerly to visit the existing primitive tribes, and reported back about the gay, happy life of Tribe X which had no private property and no inhibitions imposed by monogamous marriage.

There are several things to be said about this worship of the primitive. First, it is absolutely illegitimate to do, as Polanyi does, and infer the history of pre-Western civilization from analysis of existing primitive tribes. Let us never forget that the existing primitive tribes are precisely the ones that didn’t progress—that remained in their primitive state. To infer from observing them that this is the way our ancestors behaved is nonsense—and apt to be the reverse of the truth, for our ancestors presumably behaved in ways which quickly advanced them beyond the primitive stage thousands of years ago. To scoff, therefore, at the idea that our ancestors among primitive tribes engaged in barter, then in monetary exchange, etc., on the basis of the magic and games indulged in by present-day primitives, is a blunder of the highest order.

Second, it is implicitly and even explicitly assumed that the way primitive tribes act is more "natural," is somehow more appropriate to man than the "artifices" of civilization. This is at the root of Rousseauism. The way ignorant, fear-ridden, quasi-animalistic savages act is somehow more natural, because presumably more "instinctual," than the ways of civilization. This is the root of Rousseau’s, and many other leftists', view that man is "naturally good," but is corrupted by his institutions. This basic idea is fundamentally and radically anti-human, because it denies the basic facts about human nature and the way human beings must necessarily operate. Animals are born with "instincts"; these instincts are, in essence, sense-determined responses. Animals do not possess a free will, rational consciousness; hence, they can only adapt, in sensory fashion, to their environment. Man, on the other hand, can alter his given environment by use of his reason and his free will.

Man is born a tabula rasa; he must learn and learn how to choose the ends that are proper for him, and the means which he must adopt to attain them. All this must be done by his reason.

Civilization is precisely the record by which man has used his reason, to discover the natural laws on which his environment rests, and to use these laws to alter his environment so as to suit and advance his needs and desires. Therefore, worship of the primitive is necessarily corollary to, and based upon, an attack on intellect. It is this deep-seated "anti-intellectualism" that leads these people to proclaim that civilization is "opposed to nature" and [that] the primitive tribes are closer to it. . . . And because man is supremely the "rational animal," as Aristotle put it, this worship of the primitive is a profoundly anti-human doctrine.

Anti-human, anti-rational doctrine, then, goes eagerly to illiterate, savage, fear-ridden primitives as people on whom we — the heirs of 2000 years of the finest products of civilization and the human race—are supposed to model ourselves. If an existing primitive tribe has no private property, or engages in indiscriminate promiscuity, this should be all the more reason for us to do the reverse.

The myth is then coined of the "happy savage," that [these] primitives are truly happy and content. This myth permeates the Polanyi volume. Let us shed the vestiges of romantic mythology and look at these savages as they are. They are, in the first place, complete slaves to their environment. When the fruit tree is in bloom, they can perhaps subsist by picking the fruit off the tree; but suppose there is a blight, one year, on fruit trees? What happens to this "happy-go-lucky" tribe? It dies, en masse. It is no wonder that the primitive tribes are all small in number.

Secondly, the primitive’s life is a life of almost constant terror. Terror of the world about him, which he does not and cannot understand, since he has not engaged in any sort of scientific, rational inquiry into its workings. We know what a thunderstorm is, and therefore do not fear it, and can take rational measures against lightning; the savage does not know, and therefore surmises that The God of the Thunder is displeased with him, and that therefore that god must be propitiated with votive offerings and sacrifices (sometimes human sacrifices). Since the savage has no concept of a world knit together by natural law (a concept which employs reason and science) he believes that the world is governed by a whole host of capricious spirits and demons, each of which can only be propitiated—with only partial "success"—by ritual, by magic, and by a priestcraft of witch doctors who specialize in this propitiation. So fearful is the savage that he can do nothing on his own, that his individuality is virtually completely undeveloped—because the individual savage makes almost no use of his reason and of his mind. Therefore, virtually everything the savage does is governed by immutable, utterly irrational, taboos or command: by custom.

And this is the fear-ridden, barely-human, creature whom we, people who have used our intellect to "conquer" nature, are being asked to emulate, whom Polanyi extols as being truly "social," and as being happily tree of the "inhuman" despotism of the free market.

Moreover, the life of the savage, as Hobbes put it, is "nasty, brutish, and short." His life expectancy is very short, and his life is ravaged by all manner of disease, disease which he can do nothing about except give food to witch doctors to utter incantations. The increasing conquest of disease has been made possible only by the advance of civilization: by the use of reason, by capitalism, and by the market.

Polanyi admires the tribal and other caste societies, because "nobody starves." Everyone might admittedly be on a subsistence level, he concedes, but no individual starves. Is it that great a comfort that everyone starves together? This is a grotesque statement. The primitive world—indeed all worlds before the Industrial Revolution—[is] constantly racked by famine and by plague. "Famine" was a continual occurrence before the Industrial Revolution; since the I.R. we have never heard of famine (the only recent famines have been in Communist China, and earlier, in Soviet Russia). Famine emerges from a lack of inter-local trade; when one locality’s food crop fails, since there is virtually no trade with other localities the bulk of the people starve. It is precisely the permeation of the free market throughout the world that has virtually ended this scourge of famine, by permitting trade between areas. It is this market that Polanyi castigates as the bringer of virtually all evils.

Polanyi admires all societies of caste and status: tribal, mercantilist, or whatnot. A caste society, he maintains, provides "security." Famines and plagues: are they "security"? No amount of restrictionism can provide that production from which any economic "security" must come; in fact, just the opposite, for all caste restrictions, all restrictions on the market, simply cripple and hinder production, and thus keep everyone at or near subsistence level. In fact, the Asiatic "extended family" system, has kept China, Indonesia, etc. in primitive poverty and misery for centuries. This "share and share alike" custom, which Polanyi undoubtedly admires, decrees that as soon as any individual makes a little more money, he must distribute it pro rata among a whole host of distant, as well as near, relatives. As a result of this "noble" system, there is no incentive for any individual Chinaman to earn more and produce more and hence, the Chinese did not (before Communism) do so and did not progress. In Java, the village commune system, definitely Polanyi-esque, means that a starving, massively overpopulated Java has been exploiting and tyrannizing over, the much more progressive and capitalistic islands of Indonesia (e.g. Sumatra).

The "security" of the caste system is the security of the prison-house. (By the way, anyone who wants "security" in a market economy can always commit a crime and go to jail, where Polanyi-esque security will be furnished to him.) This "security" means an all-pervasive hopelessness in a caste society. The son of a baker must always be a baker, even if his interests and abilities are completely elsewhere. No one can rise, no can shift his occupation or do anything differently from his ancestors. This is the annihilation of all that is most vital, most purposeful, most alive, in the life of any individual.

Another basic flaw in any caste society—and ignored by Polanyi—is the problem of population growth. The witch doctor, the custom of tribe, the chief or king, and Prof. Polanyi, can all decree that X and the son of X be a baker, Y and the son of Y be a farmer, etc., but what happens when population increases, as it almost inevitably tends to do? What does the younger son do? Polanyi sneers at Malthus but the Malthusian problem is always supremely evident in the caste society. What happens when the "natural checks" of famine and disease do not work sufficiently? This is why the caste-communal society of Sparta put their babies out to the woods for an "exposure test," not because the Spartans were inherently a cruel people, but because they were faced to what was, in the context of their social structure, an insoluble problem: what to do with their population increase. It was population growth, further, that was wrecking mercantilist Europe. Population growth was the reason for the rise of able-bodied beggars and thieves in 18th Century England. There was no work for them to do. It was the rise of capitalism, the advance of capital to provide them with jobs, the expansion of the market to producing cheap goods for the masses, that not only enormously increased the standard of living of the masses, but also provided jobs for these increasingly "excess" people.

Furthermore, Polanyi continues the old anti-capitalist canard that the Industrial Revolution was made possible by the enclosure movement, which supposedly drove sturdy yeomen off their lands, and into the cities. This is nonsense; not only did the enclosure movement enclose the "commons" and not people, and by the great increase in agricultural productivity provide the wherewithal in resources and income for the industrial revolution, but also the enclosures did not drive people off the land. The surplus population in the rural areas was a consequence of population growth; it was this increase in rural population that drove these desperate people into the cities to look for work.

Capitalism did not, therefore, tragically disrupt, as Polanyi would have it, the warm, loving, "social" relations of pre-capitalist era. Capitalism took the outcasts of society: the beggars, the highwaymen, the rural over-populated, the Irish immigrants, and gave them the jobs and wages which moved them from destitution to a far higher standard of living and of work. It is easy enough to wring one’s hands at the child labor in the new British factories; it is, apparently, even easier to forget what the child population of rural England was doing before the Industrial Revolution—and during the Revolution, in those numerous areas of England where the I.R. and the new capitalism had not yet penetrated: these children were dying like flies, and living in infinitely more miserable conditions. This is why we read nowadays, when it seems inexplicable to us, British and American writings of the period which praise the new factories for giving work to women and children! This praise was not due to their being inhuman monsters; it was due to the fact that, before such labor was available, and in those regions where such labor was not available, the women and children were living and suffering in infinitely worse conditions. Women, children, immigrants, after all, were not driven to the factories with whips; they went voluntarily and gladly, and that is the reason.

There are even broader aspects of the population problem which Polanyi ignores. For capitalism was responsible, in a sense, for the huge increase in population in the modern world. Capitalism’s upsurge in living standards has enabled capitalism to free the world from the Malthusian checks, from the grim evils of over-population, and has permitted a rapid multiplication of population at even higher living standards than before. So when Polanyi, in effect, asks us to scrap the market and return to a caste or communal or even tribal society, he is not only asking us to abandon the luxuries of civilization and return to the subsistence level of the primitive tribe; he is also asking for the liquidation and eradication of the vast bulk of the world’s population Because if a caste or tribal system will "work," even on the least subsistence level, it will work only for a small, tiny minority of the population; the rest of us will starve en masse. The fact noted above, of the small numbers of the primitive tribe, takes on, then, a new and more terrible significance.

(For a refutation of the enclosure myth and a recognition of the key being increase of population, see W.H.B. Court, A Concise Economic History of Britain (Cambridge University Press, 1954).)

In all of his complaining about laissez-faire and the free market, Polanyi somehow overlooks probably the single most important aspect of this system: freedom. In a free society, no one compels Polanyi or anyone else to join in the free market. If Polanyi or any other critic is so hostile to the alleged tyranny, "instability," etc. of the market, the free society leaves them free to get out. Anyone, at any time, can leave the market: can go off in the woods and live on berries in a cave, can buy his own farm and be completely self-sufficient, cut off from the rest of the world, or can vary his participation as much as he likes. Anyone who wants to can, in a free society, even join a voluntary commune, like Brook Farm, or an Israeli kibbutz, and lead as blissfully communistic a life as he or she wishes. Since everyone still has the option to do so, since anyone has the option to go oft to a desert island or join a commune, why is Polanyi bitter about the market??

In fact, the free society leaves everyone such options. Why, in that case, has the free market flourished when people have been left free, flourished until it brought about capitalist civilization? The reason is precisely that the vast bulk of the people, in the past and in the present ages, don’t agree with Polanyi: they vastly preferred the so-called instability, unhappiness, et. al. of the market to the supposedly happy subsistence-life of a communal savage. For, if they had not vastly preferred it, they would not have joined the market; they would have sacrificed monetary income for their tribal or self-sufficient farm life. Yet they did not. There is no better way of thoroughly refuting Polanyi’s weeping about the lost glories of "society" than to observe the numberless millions who have chosen the way of the market when they had the free choice.

In fact, it is precisely such left-wing intellectuals as Polanyi who are always weeping about the "Coca-Colaization" of the rest of the world, are bemoaning the supposedly lost glories of "folk culture" in the undeveloped countries. For, as soon as they get the chance, peoples all over the world, regardless of cultural tradition, abandon their supposedly beloved culture, in order to adopt Western ways, Western clothes, get a Western-type job or serve Western tourists, and earn Western money—and drink Coca-Cola and go to Hollywood movies, as well. It took only a few years, for example, for the people of Japan to abandon their thousand-year old traditional culture and folkways to turn eagerly to these supposedly decadent market-brought goods of the West. Why is that? Is it Western "imperialism"? Are American troops forcibly drugging everyone with Coca-Cola?

(For an inspiring and scholarly discussion of the enormous growth of a market and exchange economy, among illiterate natives of West Africa, I strongly recommend P.T. Bauer, West African Trade, Cambridge University Press, 1954).

Even in backward countries that are hostile to capitalism: such as India, Ghana, etc., these countries do not at all reject the fruits of Western civilization on behalf of their seemingly joyful tribal traditions. On the contrary, they want Western products and conveniences; it is just that they have not understood that capitalism is needed to obtain them.

Given a choice, then, almost everyone chooses the market economy and its advanced civilization, even, curiously enough, Prof. Polanyi himself, who most conspicuously did not rush off to some tribe or commune.

Why, then, do we consider the free market as "natural," as Polanyi sneeringly asks? The reason is that the free market is (1) what men have turned to when they have been allowed freedom of choice, and (2) what men should turn to if they are to enjoy the full stature of men, if they are to satisfy their wants, and mould nature to their purposes. For it is the market that brings us the standard of living of civilization.

In his book, Polanyi is continually assuring us that his beloved primitive natives do nothing at all for personal "gain"; only for magic, for what he calls "reciprocity," etc. What is so bad about gain, which Polanyi virtually assumes to be a malevolent word? The principle of the free market is voluntary exchange for mutual benefit. This mutual benefit constitutes gain. The free market is, in fact, that interpersonal relationship which does insure mutual benefit by all relating parties. Why does Polanyi find this so obnoxious? Why, at every point, does he seem to prefer only an inter-personal relation where only one party gains? For if only one party gains it follows that the other party loses; in short, it follows that for Polanyi, the ideal relationship between people is not mutual gain, but exploitation: the gain of one at the expense of another. Is this the "moral," "social" relationship for which we are supposed to abandon market-economy and civilization itself? Why is it that every socialist hates and condemns the exchange relationship—the supposedly "calculating," "inhuman," relationship where both parties gain? Do they consider it more moral for A to let himself be exploited by B, and for B to exploit A?? For make no mistake, when the socialist condemns A for not giving money to B without receiving anything, material or spiritual, in exchange, he is calling upon A to be a sacrificial animal for the benefit of an exploiting B.

In his discussion of his beloved primitive tribes, Prof. Polanyi says that they deal with each other, not on the basis of (Ugh!) mutual gain, but on the basis of "reciprocity" and "redistribution." The "principle of redistribution" is, of course, this same principle of exploitation. It is the "redistribution," coerced by the State or the tribe, from the producers to the parasitic class favored by the tribal or State chiefs. As for the "principle of reciprocity," Polanyi is certainly unclear about just what it entails. To some small extent, to the extent that the process is rational, this is simply exchange or barter, smuggled in by the conceptual back door. To the extent it is not rational, it is either play or sport—which hardly needs further comment, or it is ritual magic, which has been commented on above. It is apparently the latter part of "reciprocity" that Polanyi extols, for he is apparently enchanted by the "Kula trade," in which one island gives certain objects to another island, and will only receive similar (or the same?) stuff back years or decades later from some other island in the ring. What Polanyi especially likes about this is its lack of true mutual gain—or is it its obvious pointlessness? And, again, must we follow the path of a magic-ridden group of savages?

I mentioned that the free society would permit Polanyi or any who agree with him to abandon the market and find whatever other forms suit them. But one thing and one thing alone the free society would not permit Polanyi to do: to use coercion over the rest of us. It will let him join a commune, but it will not let him force you or me into his commune. This is the sole difference, and I therefore must conclude that this is Polanyi’s sole basic complaint against the free society and the free market: they do not permit him, or any of his friends, or anyone else, to use force to coerce someone else into doing what Polanyi or anyone else wants. It does not permit force and violence, it does not permit dictation, it does not permit theft, it does not permit exploitation. I must conclude that the type of world, which Polanyi would force us back into, is precisely the world of coercion, dictation, and exploitation. And all this in the name of "humanity"? Truly, Polanyi, like his fellow-thinkers, is the "humanitarian with the guillotine." (See Isabel Paterson’s profound work of political theory, The God of the Machine, Putnam’s, 1943).

The naked and open advocacy of force and exploitation would, of course, not get very far; and so Polanyi falls back on the fallacy of methodological holism, on treating "society" as a real entity in itself, apart from, and above, the existence or interests of the individual members. The market, Polanyi thunders, disrupted and sundered "society"; restrictions on the market [are] "society’s" indispensable method of "protecting itself." All very well, until we begin to inquire: who is "society"? Where is it? What are its identifiable attributes? Whenever someone begins to talk about "society" or "society’s" interest coming before "mere individuals and their interest," a good operative rule is: guard your pocketbook. And guard yourself! Because behind the facade of "society," there is always a group of power-hungry doctrinaires and exploiters, ready to take your money and to order your actions and your life. For, somehow, they "are" society!

The only intelligible way of defining society is as: the array of voluntary interpersonal relations. And preeminent amongst such voluntary interrelations is the free market! In short, the market, and the interrelations arising from the market, is society, or at least the bulk and the heart of it. In fact, contrary to Polanyi and other’s statements that sociability and fellowship comes before the market; the truth is virtually the reverse; for it is only because the market and its division of labor permits mutual gain among men, that they can afford to be sociable and friendly, and that amicable relations can ensue. For, in the jungle, in the tribal and caste societies, there is not mutual benefit but warfare for scarce resources!

Curiously, in his idyllic picture of tribal life, Polanyi never seems to mention pervasive inter-tribal warfare. Such warfare is almost necessary, because groups of people are fighting over scarce resources: water holes, hunting, etc. Tribalism, not capitalism, is the "rule of the jungle," for warfare and extermination of the "unfit" is the only way that some of the tribes can keep alive. It is the capitalist market economy, which increases resources by mutual benefit, that is able to bypass the rule of the jungle, and to rise above such animal-like existence to the status of advanced civilizations—and amicable relations among men.

The market, therefore, is preeminently social; and the rest of the social consists of other voluntary, friendly, non-market relations which also, however, are best conducted on the basis of a spiritual exchange and mutual gain. (Isn’t it better if A and B are both friendly to each other, than if A is friendly to B but not vice versa?) The market, then, far from being a disrupter of society, is society. What, then, would Polanyi use to replace the market? The only other relation aside from the voluntary, is the coercive; in short, Polanyi would replace the market by the "social" relation of force and violence, of aggression and exploitation. But this is not social; it is profoundly anti-social. The exploiter, who lives parasitically off the producer by violence, is anti-social; for he is not living according to the best nature of man: by producing and exchanging his produce for the produce of another. He is living by use of violence, one-sidedly and parasitically at the expense of the producer. This is a profoundly anti-social, and anti-human relationship. It disrupts the social market, and leads it—and with it—civilization and civilized living standards, to crumble into the dust.

Franz Oppenheimer, in his brilliant work, The State (Vanguard Press, 1922), put it very well: there are two possible roads to wealth, he wrote: one is by producing, by transforming matter with personal energy, and then exchanging this produce with the produce of another. This, he termed the "economic means." Another road is to wait until someone else has produced wealth, and then to seize it by force and violence. This he called the "political means." Which method is "social," and which is profoundly and disruptively anti-social, should be easy to see. Karl Polanyi, in claiming to save society from the market, is in the process of destroying society itself by destroying the market. Polanyi’s work is an apotheosis of the political means.

That this is what Polanyi will bring should also be evident from his discussion of free labor. For Polanyi, allowing labor to be a "commodity" was one of the worst sins of the free market; Polanyi therefore proposes to take labor out of the free market. But what is the only alternative to free labor? It is unfree labor, i.e. it is serfdom. The man who is not allowed to be a free laborer is a serf. In fact, in extolling the process (supposedly typical of the primitive tribe) of working without pay, Polanyi is precisely extolling the system of slavery. For what is unpaid, unfree labor, but slave labor?

Polanyi, like all socialists, is at pains to teach us that the coming of the new "society" without market is inevitable. Thus, for him, every restriction on the market in the recent century or so came as a "recognition" of social need, and not as a deliberate choice governed by certain ideas and interests. To preserve this myth, Polanyi angrily criticizes those, like Mises, who believe that certain definite socialistic and restrictionistic ideas and interests brought about these government interventions in the market. Polanyi sets up a straw man by calling this a "conspiracy" theory of history, which it is not at all. There need be no concerted conspiracy for two different statists or socialists to advocate statist measures in two different fields. (Of course, Polanyi also ignores very important actual conspiracies like the Fabians.) The result flows inevitably and "naturally" from the premises held by the two men. Not being willing to discuss the different and conflicting ideas at stake in the problems of socialism vs. the market, Polanyi tries to put the whole thing on the plane of social determinism and inevitability, so that human volition plays no role in the [process].

As a corollary, then, to his rejection of reason, Polanyi also rejects man’s free will. Instead, "society" acts, determines, protects, recognizes, etc. In this way are the real determinants of action in society: the ideas adopted and pursued by individuals, forgotten, and the spotlight, turned on so-called "social forces," "society," etc.

Like all determinists, Polanyi eventually involves himself in severe contradictions. For, when it comes to the adoption of the free market in the nineteenth century, [Polanyi claims] here was not something socially determined, but the reflection of tragically wrong ideas held by laissez-faire ideologues, who by "intervention" in the "natural" (tribal? caste?) processes of state regulation, etc. temporarily brought about a free market.

I could go on almost indefinitely in detailed criticism of Polanyi, but there is no point in prolonging this too much further. That by "society" Polanyi means force and the "political means" is indicated by his repeated warnings that "social reality" necessarily must involve force and violence. (But why not force limited to combating aggressive force, thus minimizing the role of force in society?) Polanyi, in caustically rejecting the ideal of free trade, doesn’t realize that he is thereby rejecting international peace, for a world of socialist nations will inevitably conflict with each other’s plans, and precipitate conflict of interest and wars.

Also revealing is this quotation: "Economic cooperation (in the free 19th Century free market) was limited to private institutions as rambling and ineffective as free trade, while actual collaboration between peoples, that is, between governments, could never even be envisaged." (Note the totalitarian identification of "people" and "government.") Polanyi sees that the commodity money of the old gold standard is indispensable to a true free-market economy, and therefore scornfully denounces it. Like most anti gold standard, pro-fiat paper men, he at the same time declares that money is more than a commodity (more than just a "veil"), and much less than a commodity (money is a "mere ticket"). Another contradiction; actually, money is, properly a commodity—period. Polanyi is also totally wrong when he says that business "needs" continual doses of inflation, to bolster purchasing-power, which a pure gold standard could not provide, and wrong too when he absurdly maintains that a Central Bank is not as deflationary, in a contraction, as a pure gold standard without such a central bank. A central bank is inherently more inflationary, but when the day of reckoning comes, and it must contract (under a gold standard) it contracts far more than would otherwise be necessary.

Further: Polanyi seems to think that he has scored a great coup on free market economists when he says that trade first developed in international and interregional channels, and not from first local and then international. So what? This is certainly not in any sense a refutation of free market economics. It is not surprising that, in a world of self-sufficient farms and manors, the earliest trade should be with far-distant places, which are the only places from which local farms can obtain certain produce. (E.g., Western Europe could only procure spices from the Near East.) This is, in fact, a manifestation of the gains of trade and division of labor, and the growth of the market, and not vice versa.

Finally, in the final chapter, Polanyi tries to assure us that his projected collectivist society would really preserve many of the "freedoms" that, he grudgingly admits, the market economy brought us. This chapter is almost a textbook presentation of utmost confusion about the concept of "freedom"; and of confusion between the vitally distinct concepts of "freedom" and of "power."

(On this crucial distinction, always blurred by collectivists, see F.A. Hayek, The Road to Serfdom.) Many "freedoms" would be kept, even maximized, (after all, isn’t a worker with more money more "free," and who cares about the money taken away from the luxurious rich, anyway?), and including such "freedom" as the "right to a job" without being discriminated against because of race, creed, or color. Not only does Polanyi vainly think, or assert, that we can have at least enough "freedoms" in his collectivist society; he also believes, equally vainly, that we can preserve industrialism and Western civilization. Both hopes are vain; in both cases, Polanyi thinks he can preserve the effect (freedom of speech, or industrial civilization), while destroying the cause (the free market, private property rights, etc.) In this way, he is thinking, not only as Nehru and Kwame Nkrumah think, he is thinking also in the same fashion as the savage whom he so exuberantly extols.

To sum up: I have read few books in my time that have been more vicious or more fallacious.

This critique was written as a private memo to the Volker Fund in June 1961. It has never been published.